Business Dispute Resolutions Through Mediation - What is Mediation?

Hi this is Brett Cenkus the right brain business attorney and today I am talking about mediation which is a type of alternative dispute resolution and disputes are historically in the United States fought in court litigation litigation is time-consuming it's expensive it's what even lawyers describe as a lose lose lose process clients often say the only people who come out of this winning are the lawyers but I can tell you I didn't do a ton of litigation but when I'm involved in it my clients never very happy no one's ever winning they're really not happy even if I do an amazing job just through the whole process I don't feel like it's a I don't feel like I win right there so it just it's a rough process part of why I don't really like to be involved the dispute work I do is headed off before litigation almost entirely so litigation I'll probably I don't know if I've got my my dates here but maybe 40 years ago something like that alternative dispute resolution mechanism started to pop up so the two big ones are mediation mediation and arbitration so arbitration is kind of like litigation and there can there's different systems that you opt into in your contract upfront you agree if we have a dispute we're not going to fight this out in court we're gonna go arbitrate it and we're to choose the American Association of Arbitration or JAMS which I think stands for justice through arbitration and mediation services or something like that judicial arbitration mediation services JAMS there's other ones internationally the International Chamber of Commerce they have these systems where they bring private parties in and they have people who serve as arbitrators they could be ex judges or lawyers and you pay the arbitrator by the day you can have one arbitrator or three but it ends up being a lot like arbitration if you choose streamlined or simple rules depends on the system you're in then they can be a little bit quicker but generally speaking it's time-consuming mediation is what I want to talk about today and you inside from certain circumstances certain types of companies and contexts there you should exclude this in every business contract so I'll get to the times when you might not but almost universally you should use this and the lawyers for some reason mostly I don't most lawyers I see don't love to use mediation and I've got some theories as to why that is but let me explain first what mediation is so unlike arbitration and litigation where at the end you get a result and you should pay a lot of money and expend a lot of effort and time to get that result you get a result I an arbitrator or judge says you're right you're wrong here's what happens mediation isn't like that mediation is much quicker number one most mediations take place over a half a day or a full day it's much less expensive you can expect to pay a mediator something like 750 to $1,250 per side and you'll go in each party usually represented by attorneys but don't have to be and you just tell the mediator your side of the story and the mediator tries to work get you both to come up with an agreement you build it into a contract upfront it's required but fundamentally to make it work both parties have to attend a mediation in good faith if one shows up with no intent whatsoever to listen to the other side you're not gonna be able to get a lot accomplished and I think that's probably why a lot of attorneys don't like it they've seen that not work often I've seen it not work often I've seen it work though and for that amount of money something you could do very quickly to try and get the parties across the table and just come to a resolution and a good mediator is gonna be in there breaking the parties up and working them a little bit telling you you're you're strong here but you know you're really weak here and this is their position do you see that you know try and get the parties to come back together and come up with a resolution the mediator is not gonna say here's the resolution they're just gonna try and make the parties reach an agreement and if they do typically the mediator will put together a settlement agreement so again for that amount of time and effort I think it's definitely worth and almost universally worth the effort to build it into your contract upfront I've seen it I was general counsel of a public company and I would see oftentimes we have a lot of you know we had our share of litigation it was a big you know company it was a big big company and we were doing business across the globe had a couple thousand employees that stuff comes up and I would often see the businesspeople you know this this relationship this relationship I mean whether we were selling something we're buying something whatever the business people on the front lines involved and this had started off as a relationship and it was positive you know with the vendor with the customer and somewhere along the line it got off-track and it gets so off track that the business people don't want even talk you know they're yelling at each other they're saying we'll get our lawyers involved and then they throw it over to us the lawyers and say go get them well what go get'em means is years of money and effort and expense and time and it's painful and emotional just to bring the people business people back to the table to talk about a resolution at a point in time when yes they'd say down to Texas they were rode hard and hung up wet you know it's basically just like just brutal and ok now let's go figure it out so to me it's like let's take a day or two and go figure it out on the front side now emotions sometimes doesn't allow that to happen I mean sometimes that resolution can only come after a pretty painful process and after things have really cooled emotionally but mediation I think building it makes some sense to at least try to get the business people back to the table to talk about where things went wrong and to see each other's point of view if you're the smaller player right so if the your counterparty your customer is much much bigger than you you should absolutely push for mediation because you will be outmatched in arbitration and litigation and they're likely to know that to the point where they can push you around if it gets to that and now some companies who have that sort of muscle don't want to agree to mediation upfront but just because of this reason most are open to it though and then if your attorney pushes for it it's real hard for the other side to say no you know when I say really you know if something goes wrong you won't agree to get together for a day and just talk about what went wrong that just seems to why would we want to not do that it's hard for the other side to say no so a lot of times you'll have success getting it built in your contract upfront and you need to do that because if you don't build it in up front you might end up in a situation later on where both sides are not talking to each other can't come up with a resolution when I say left you say right it's like now is the time to bake that into a contract the only time you would consider not having mediation is when you're the really well-heeled company with a lot of muscle and you just as a matter of course refused to do that you want to retain your ability to push the other side around it and I understand that and I've got clients who that's the their position so that's my position right I work for the client personally in my business affairs in my engagement letter with clients I'm happy to mediate happy to sit down and understand your your side of the story right like that's really keeping with who I am and how I want to be in the world but that's a that's a philosophical thing and it's their entitlement and that's fine and everything's negotiable in the contract so outside of that context you know if you take the view I do it doesn't matter if you're the big party you know if you're the you're the party with more resources or less or you're a party with playing resources but you always think hey to spend a day and listen to the other party's side is fair you know we hate litigation you should absolutely build that into the contract upfront when your attorney says nah you don't want to mediate say yeah I do right it may not work right I don't know the statistics on it but I've got to think it doesn't work more often than it does but that doesn't mean in the overall context of dispute and what's ahead if you can't figure out things quickly and easily through mediation or some other informal meeting if you go to arbitration in the litigation they're so time-consuming expensive and brutal and emotionally painful that it's worth giving this a shot even if it doesn't work out any questions about mediation if you're categorically opposed to it if you want to understand a little bit more about how it works in a contract call me drop a comment by all means drop a comment about other things other questions you have about any of this dispute resolution related things arbitration litigation and I'd be happy to give you some feedback or or to do a video based on what I hear Thanks

Channel: Brett Cenkus

Views: 4,677

Keywords: business law, business dispute, business mediation, adr, alternative dispute resolution, dispute resolution mechanisms, business contract dispute, business lawyer, corporate litigation, arbitration provisions, mediation and arbitration, what is mediation, what is arbitration, what is litigation, what is adr, what are alternative dispute resolution mechanisms

Id: ZdXveEbs7cg

Length: 8min 28sec (508 seconds)

Published: Tue Jul 03 2018